United blames low prices on growers outside the co-op increasing acreage

By DAVE WILKINS

Capital Press

A national potato cooperative is asking growers to cut acreage this year in an effort to bolster prices that have become unprofitable.

Open-market potato prices have sunk well below the cost of production since harvest of a larger-than-expected crop in 2009.

The board of directors for the United Potato Growers of America has recommended that producers plant 25 percent fewer fresh-market acres this year than in 2004 -- the year they use as a baseline.

Historically, about half of Idaho's potato crop has gone to the fresh market and half to processing. If that's true, a 25 percent reduction in fresh acres this year would result in total plantings of about 280,000 acres compared with 320,000 acres last year. That would be the state's smallest crop since the 1980s.

Significant acreage increases last year by growers outside the co-op, combined with above average yields will result in a significantly larger carryover of potatoes into the current crop production cycle, United leaders said.

"Expansion by non-United members in 2009 pushed the industry into a costly oversupply situation this marketing season," United President Lee Frankel said in the co-op's December newsletter.

Continued expansion by non-members could result in even worse returns for the industry this year and in 2011, he said.

The 25 percent reduction recommendation is just a starting point, Frankel said in a phone interview from Orlando, Fla., where he was attending national potato meetings.

Some growers may need to cut significantly more, depending on their market window, he said. Those who produce for the summer and early fall markets, as well as growers in states with the largest carryover stocks, will need to be more aggressive in trimming acreage.

At this time last year, United Potato Growers called on its members to hold steady on potato acreage, warning that an increase in acreage could lead to an unprofitable crop due to globally dropping demand and a growing recession.

Growers didn't listen.

Nationally, growers planted a little more than 1 million acres of potatoes last year. USDA has estimated 2009 production at 432 million hundredweight, a 4 percent increase from 2008.

In Idaho, growers turned in a record average yield of 411 hundredweight per acre last year. Total production in the nation's top potato state was an estimated 131 million hundredweight, a 12 percent increase from 2008.

The large crop has weighed heavily on prices. In November 2008, fresh-market potato prices averaged $8.87 per hundredweight. In 2009, prices fell steeply. Average fresh-market grower returns in Idaho were about $3.36 per hundredweight in late December, according to United Potato Growers of Idaho, an affiliate of the national co-op. That's about half as much as it costs to grow the crop, according to University of Idaho cost-of-production estimates.

The low prices have sparked some talk of a diversion program, but Frankel said the national co-op has no plans to conduct a diversion in the classic sense of just dumping surplus potatoes.

The co-op is instead promoting voluntary quality improvement measures to manage supply.

For starters, growers should refrain from sending any marginal spuds to packing sheds, Frankel said. They should also cull out sizes that don't have a known market so the spuds don't just sit on the warehouse floor and deteriorate, he said.

"We need to make sure that those potatoes don't get packed in the first place," he said.

Use of such measures in the Columbia Basin has resulted in an increase of about $2 per hundredweight in recent fresh market prices, Frankel said.

He's hopeful similar measures will be adopted by fresh-market growers in other regions.

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